Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Gonzales

ORIGINAL DATE

LAST UPDATED

2/5/06

2/8/06 HB 611/aHAGC

SHORT TITLE Taos Valley Water Rights Acquisition

SB

ANALYST Hoffmann

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$500.0 Non-recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates Senate Bill 529.

Relates to Senate Capital Outlay Request 507 and Senate Capital Outlay Request 889.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the State Engineer (OSE)

Department of Finance and Administration, State Budget Division (DFA)

SUMMARY

Synopsis of HAGC Amendment

House Bill 611 as amended by the House Agriculture and Water Resources Committee incorpo-

rates the following changes: (1) the appropriation is made to the Indian water rights settlement

fund, (2) the appropriation does not revert and may be spent in fiscal year 2007 or any subse-

quent fiscal year, and (3) the purpose is specified as water rights acquisition for the non-Indian

portion of the Pueblo of Taos water rights settlement.

Synopsis of Original Bill

House Bill 611 appropriates $500,000 to the Interstate Stream Commission (ISC) to match fed-

eral and local funding for water rights acquisition for the non-Indian portion of the settlement of

the Taos Valley water rights adjudication.

House Bill 611/aHAGC – Page

2

FISCAL IMPLICATIONS

The appropriation of $500,000 is a non-recurring expense to the general fund. Any unexpended

or unencumbered balance remaining at the end of fiscal year 2007 shall revert to the general

fund.

SIGNIFICANT ISSUES

This line-item proposal was not in the Executive budget recommendation or in the LFC’s appro-

priation recommendations.

The Office of the State Engineer receives appropriations for the purposes of acquiring water

rights and entering into litigation to settle water rights. It has the statutory authority to acquire

water rights and enter into settlements of water rights.

The Office of the State Engineer provided the information below.

The State of New Mexico, Taos Pueblo, the Town of Taos, the Taos Valley Acequia Association

on behalf of the Taos area acequias, twelve Taos area mutual domestic water consumer associa-

tions, and El Prado Water and Sanitation District have been actively negotiating the terms of a

proposed settlement of the water right claims of Taos Pueblo since late 2003. These negotiations

are subject to a confidentiality order issued by the federal district court, and no proposed settle-

ment agreement or agreed-upon settlement cost projections have yet been released to the public.

In the absence of any costs projections provided by the negotiating parties, the OSE estimates

that if a settlement is reached the state’s share of the costs to implement the settlement could

reach $20 million.

Even if a proposed settlement is announced soon, it still would need to be approved by congress

and the legislature. The state therefore is unlikely to be obligated to provide any funds to im-

plement a settlement before the end of FY 2007, when the funding in this bill would revert to the

general fund. The bill therefore would better serve the state’s interests in promoting a settlement

if it were amended to appropriate the monies to a Taos settlement sub-account in the Indian wa-

ter rights settlement fund (IWRS fund), which was created by the 2005 legislature (Laws 2005,

Ch. 172) to provide a mechanism for the state to fund its portion of the costs of implementing

Indian water rights settlements. The 2005 legislature created the IWRS fund because such set-

tlements typically take years to develop and implement. That 2005 legislation therefore provides

that money appropriated to the IWRS fund does not revert to the general fund. The ISC adminis-

ters the IWRS fund, and upon a joint resolution by the legislature the ISC may expend money in

that fund to pay the state’s share of the costs of implementing a settlement. Amending this bill to

make the appropriation to a sub-account in the IWRS fund for the Taos Pueblo water rights set-

tlement would ensure that the appropriated funds would be available when needed to implement

the state’s share of a settlement with Taos Pueblo.

DUPLICATION AND RELATIONSHIP

Senate Bill 529 is a duplicate of this bill.

Senate Capital Outlay Requests 507 and 889 each contain appropriations in the amount of

House Bill 611/aHAGC – Page

3

$499,000 to the Office of the State Engineer to purchase water rights in Taos valley for acequia

associations in Taos County.

TECHNICAL ISSUES

It is unclear to what extent the ISC would be involved in any transactions to acquire water rights

for the settlement with these funds. If the ISC itself were the entity acquiring water rights, then

there would be an impact on the ISC in terms of staff time necessary for such transactions.

ALTERNATIVES

It may be the case that non-Indian water rights will not be settled independently of the litigation

related to the claims of Taos pueblo. As the Office of the State Engineer stated in

“SIGNIFICANT ISSUES,” the bill would better serve the state’s interests in promoting a settle-

ment if it were amended to appropriate the monies to a Taos settlement sub-account in the Indian

water rights settlement fund (IWRS fund), which was created by the 2005 legislature (Laws

2005, Ch. 172) to provide a mechanism for the state to fund its portion of the costs of implement-

ing Indian water rights settlements.

CH/yr